Stocks Small Recovery – Gloomy Outlook Persists
European stock indexes opened higher on Tuesday. Madame Risk showed some recovery after Monday’s sharp drop. However, analysts say fears of low growth continue to weigh on markets. Asian stocks fell overnight to their lowest level in nearly two years before losing ground. This month, the drop in stock markets is due to major central banks’ monetary tightening and slowing economic growth.
Central banks raised interest rates in the U.K., U.S., and Australia last week. Investors tightened as policymakers struggled with rising inflation. Although these drivers were retained on Tuesday, Markets saw a slight recovery. This should continue until U.S. Street futures open on Wall Street. MSCI, which controls shares in 50 countries, traded steadily. At the beginning of the session, it reached its lowest point since the end of 2020.
STOXX 600 increased by 0.8%. But growth was small compared to a 6.6% loss in May. The S&P 500 futures saw a gain of around 0.8%. Nasdaq futures added 1.3%. According to Mizuho’s interest rate strategist, the return was a natural adjustment after the previous session’s fall. Traders can also position themselves to take advantage of any mood stimulus which comes from the primary data of the U.S. Consumer Price Index on Wednesday. Suppose it shows that the monthly index is going in the right direction. In that case, it will lead to potentially sharper Fed and price increases.
Stocks and Expectations
The dollar index changed slightly and reached a 20-year high on Monday. At the same time, the Australian dollar has fallen to its lowest point in two years; It has suffered from fears of slowing economic growth.
China’s export growth slowed to its weakest point in almost two years. The central bank has promised to step up support for a slowing economy. Oil prices rose after a sharp drop on Monday. This was driven by fears of a stronger dollar, a growing recession, Also by blocking COVID-19 in China.
Considering that Russia may cut off gas supplies to Europe, German officials are preparing an emergency package that could include taking control of critical firms. E.U. members can agree on the European Commission proposal this week; Ban all oil imports from Russia.
Yields on European government bonds were slightly higher; Germany’s 10-year income increased by one basis point to 1.1%. The 10-year yield in the U.S. was 3.0499%. They decreased after reaching 3.203% on Monday – a level not seen since 2018. Gold recovered somewhat on Monday, falling about 0.4%.
Bitcoin rose 5.5% and recovered to an 11.6% decline on Monday; This is the most significant daily drop in the currency since May last year. At about $31,736, the cryptocurrency lost more than half of its value; After reaching an all-time high of $69,000 in November.
Asia Shares and Gloomy Outlook
Hong Kong shares fell on Tuesday after a one-day break, coinciding with a drop on Wall Street. And Chinese stocks rose on Beijing’s pledges to support the economy. Signs of a bargain are seen in both markets. The yuan has stabilized after previously falling to a new 18-month low. The Hang Seng Index lost 4.1% before returning a loss, and trading fell 1.8%. The Hang Seng Technical Index fell 3.2%.
Both the CSI300 Index and the Shanghai Composite Index were up 1.1%. According to strategists, all eyes are on U.S. stocks. If Wall Street continues to decline, it will be in global markets, including China and Hong Kong. The S&P 500 index fell more than 3% amid fears of stagflation and rising U.S. interest rates this week.
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